PKK Starts Telling Some Truths, and the Stock Price Tanks Because of It

Subscribe now Last week, Tenet Fintech (PKK.CN) (PKKFF)released a Q&Afollowing the Q2 2026 financial results. Regarding myfirst point in a series of improvementsthat will be required before I purchase shares above $0.05, I think this is a step in the right direction. It falls well short of an apology and promise for improved behaviour, but there are some truths and meat to some of the answers. The tone was also stripped of any promotional talk, though enough forward looking hopefulness remains. The company almost blamed Carol Penhale again for all of its problems, but stopped short, referring only to regaining control of the Board in the spring of 2023. However, improved communication and honest discourse is only the FIRST step in recovering the company's value in my eyes. Execution must follow. Several truths in the Q&A reveal the challenges and questionable value of the company's financial performance, assets and business model. The company mentioned that registered SMEs in China dropped from 100,000 to 8,300 with the disruption in 2023 being cited as the reason for them leaving. Having 8,300 SME today sounds like a believable number. However, I take issue with the corporate disruption being responsible for over 90% of SMEs leaving and assuming that the company had over 100,000 SME in the first place. Golden was still there the entire time and is the prime connection in China. Let's think about this logically. Imagine the reverse situation with a shakeup in a Chinese company's executive leadership. Would that result in 90% of the company's Canadian division clients leaving? Would that many even be aware of any shakeup in China? What this tells me is that one or a handful of entities controlled or made decisions for a large chunk of those supposed 100,000 SME and those entities were more interested in the stock price, liquidity and listing status of PKK rather than the robustness and usefulness of Gold River or Cubeler in China. PKK's most valuable asset isn't Cubeler or Gold River or the operating expertise of its executive team. It's the ability and willingness to use its stock as currency to attract people in China who are interested in getting Canadian Dollar assets in whatever form and trading business in China for it. That has become more and more obvious to me as time goes on. The deal with Sum Trading should be an absolute sledgehammer to drive home that fact to anyone who is still in denial about it. For me, that's fine. I'm not opposed to that type of business model. PKK wouldn't be the first business to leverage its advantaged position existing as a Canadian operation rather than any real technical expertise to make a business model work. That's no different than what Canadian colleges did with international students before they went too far and faced public backlash. As long as the company is honest about what it is and it can prove that it can repatriate any future earnings. There is a legitimate investment thesis to be had if the execution is there. However, so far the cash flow has been one way from Canada to China. Countless dollars in capital raises that were subsequently written off after Chinese magic beans were purchased (the trend continues with Heartbeat) and countless shares being issued to Chinese interests - starting with Jiang Wang in 2016 - which were subsequently dumped on the Canadian market. In exchange the company managed to repatriate a little over $100,000 worth of earnings. Now another 86 million shares have been issued with commonalities to the Jiang Wang deal and his 'Plastic Bank'. At least Mr. Wang paid for his shares in a subscription. This question drives home the point above to me: The company champions its use of agentic AI as an achievement. This question is basically a roadmap for any other entity to copy the Cubeler model using AI agents should it so choose to. There is no moat here, unless there is some exclusivity clause with the bookkeeping service providers. A Chinese company could easily create something like this and deploy it in China if it wanted to. What those potential competing entities don't have is a Canadian stock listing. They can't offer a way to use business done in China using the Yuan and turn it into Canadian Dollars located outside of China. PKK can. But it has historically been on the backs of Canadian retail investors who actually have to buy shares on the open market rather than earning a large chunk of them through providing services. Anyone who says I am paranoid about this or bashing the company, keep in mind that myself and many others lived through the 'mystery TD seller' who turned into Jiang Wang. The stock price was stuck in the $0.02 range forever no matter what the company did before the perfect storm of increasing revenues, COVID-fueled hype and the actions outlined in the AMF documents took place in 2020-21. The shares issued to Sum Trading are under a lock, but I encourage people to look up non-recourse stock lending programs. There are services out there that allow owners of large amounts of shares to borrow cash with the only collateral being those shares. While billionaires like Elon Musk and Jeff Bezos use conceptually similar types of programs, these services on small caps can result in endless short selling because small cap stocks don't have the institutional backing that large caps do. I can't say for sure that this is what will happen to PKK. But I do feel it is a significant risk given what has happened in PKK's past and the incentive for any Chinese partners with a lot of PKK shares to potentially use these type of programs to gain access to Canadian funds. As for the rest of the Q&A, there was a lot of forward looking statements, but toned down. The company admitted it will need to raise more capital unless it can force early exercise of warrants should the stock price maintain $0.30. The stock has reacted negatively since the release. The market clearly sees a lot of what I see in these answers. I may be blowing by the rest of the Q&A but I think I made my point clear enough above and this blog is already long enough. Disclosure: I own some shares in PKK with no plans to buy or sell at this level. Subscribe now